A. Manjunath, Nathan Kahrobai, Mark A. Lemley, Ishan Kumar
{"title":"Illegal interlocks among life science company boards of directors","authors":"A. Manjunath, Nathan Kahrobai, Mark A. Lemley, Ishan Kumar","doi":"10.1093/jlb/lsae005","DOIUrl":null,"url":null,"abstract":"Abstract Competition between life science companies is critical to ensure innovative therapies are efficiently developed. Anticompetitive behavior may harm scientific progress and, ultimately, patients. One well-established category of anticompetitive behavior is the ‘interlocking directorate’. It is illegal for companies’ directors to ‘interlock’ by also serving on the boards of competitors. We evaluated overlaps in the board membership of 2,241 public life science companies since 2000. We show that a robust network of interlocking companies is present among these firms. At any given time, 10–20 percent of board members are interlocked; the number of interlocks has more than doubled in the last two decades. Over half of these interlocked firms report over $5 million in historical revenue, exceeding a legal threshold that makes an interlocking directorate a violation of antitrust law. Those interlocks are only illegal if the companies compete, even in part. Using the disease categories for which companies have sponsored clinical trials, we discover that a few markets are responsible for a large fraction of interlocks. We show that in dozens of cases, companies share directors with the very firms they identify as their biggest competitive threats. We provide a data-driven roadmap for policymakers, regulators, and companies to further investigate the contribution of anticompetitive behavior to increased healthcare costs and to enforce the law against illegal interlocks between firms.","PeriodicalId":56266,"journal":{"name":"Journal of Law and the Biosciences","volume":null,"pages":null},"PeriodicalIF":2.5000,"publicationDate":"2024-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Law and the Biosciences","FirstCategoryId":"3","ListUrlMain":"https://doi.org/10.1093/jlb/lsae005","RegionNum":2,"RegionCategory":"哲学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ETHICS","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract Competition between life science companies is critical to ensure innovative therapies are efficiently developed. Anticompetitive behavior may harm scientific progress and, ultimately, patients. One well-established category of anticompetitive behavior is the ‘interlocking directorate’. It is illegal for companies’ directors to ‘interlock’ by also serving on the boards of competitors. We evaluated overlaps in the board membership of 2,241 public life science companies since 2000. We show that a robust network of interlocking companies is present among these firms. At any given time, 10–20 percent of board members are interlocked; the number of interlocks has more than doubled in the last two decades. Over half of these interlocked firms report over $5 million in historical revenue, exceeding a legal threshold that makes an interlocking directorate a violation of antitrust law. Those interlocks are only illegal if the companies compete, even in part. Using the disease categories for which companies have sponsored clinical trials, we discover that a few markets are responsible for a large fraction of interlocks. We show that in dozens of cases, companies share directors with the very firms they identify as their biggest competitive threats. We provide a data-driven roadmap for policymakers, regulators, and companies to further investigate the contribution of anticompetitive behavior to increased healthcare costs and to enforce the law against illegal interlocks between firms.
期刊介绍:
The Journal of Law and the Biosciences (JLB) is the first fully Open Access peer-reviewed legal journal focused on the advances at the intersection of law and the biosciences. A co-venture between Duke University, Harvard University Law School, and Stanford University, and published by Oxford University Press, this open access, online, and interdisciplinary academic journal publishes cutting-edge scholarship in this important new field. The Journal contains original and response articles, essays, and commentaries on a wide range of topics, including bioethics, neuroethics, genetics, reproductive technologies, stem cells, enhancement, patent law, and food and drug regulation. JLB is published as one volume with three issues per year with new articles posted online on an ongoing basis.